Companies are to be given two years in which to increase the number of women they have on their boards or they could face government quotas, it has emerged.

Former trade minister Lord Davies of Abersoch is expected to call for a fifth of FTSE 350 board members to be women by 2013, rising to a quarter by 2015, when he releases his report on the issue this week. However, it is thought he will stop short of calling for quotas to be introduced unless the voluntary measures fail, after finding a lack of support for the measure.

Instead, head-hunters and shareholders will be expected to sign up to a new code of conduct, and chairmen will be urged to be more adventurous when appointing non-executive directors, with head-hunting agencies asked to provide more diverse shortlists.